Higher Education in Louisiana
A primer on Louisiana Higher Education Funding: 2008-2013
In the spring of 2007, the Legislature allocated an additional $200 million to higher education. It was first time in more than 32 years that Louisiana postsecondary education was funded at the Southern regional average. The money covered mandated costs, funded faculty and staff pay raises, investments in library and scientific equipment and in funding the state’s higher education formula at 100 percent. However, the national recession that began in late 2007 coupled with over $1.1 billion in annual tax cuts and dedications, took a brutal toll state funds available to finance higher education.
State funding for higher education is heavily influenced by the state’s fiscal situation and its funding takes a disproportionate hit when state revenues are down weak because higher education is one of the largest consumers of discretionary funds in state government. Of an approximate $25 billion budget, only approximately $7 billion is classified as general fund revenue. Of that amount approximately $5.1 billion is considered “non-discretionary” and is protected for various reasons. The remaining approximate $2.6 billion is where reductions must be focused. As a result, higher education’s share of any budget cut is 34 percent while health care’s share is 29 percent.
In 2008, despite the promise of continued 100 percent formula funding for higher education, state revenues changed rapidly and colleges and universities were hit with the first of eight consecutive budget reductions within four years, starting with a $55 million budget reduction in the fall of 2008.
Passage by Congress of the American Recovery and Reinvestment Act (ARRA) in February of 2009 diminished the potential impact of a $300 million cut for higher education for the 2009-2010 Fiscal Year. Approximately $189 million in ARRA funds were used to plug the fiscal hole, leaving higher education with a $76 million mid-year reduction along with an addition $30 million year-end reduction.
In FY 2010-2011, general fund revenues were reduced by an additional $99 million and replaced with supplementary ARRA money. A mid-year reduction of $33 million soon followed. By the beginning of the current fiscal year, higher education general funds had been reduced from $1.48 billion to $1.17 billion (inclusive of ARRA funds).
Inevitably, in FY 2011-2012 the ARRA funds expired and higher education found itself facing another $98 million reduction. This reduction was offset by increase in tuition and fees allowed by the State’s newly enacted law entitled Granting Resources and Autonomies for Diplomas (GRAD Act). In December of 2011, an additional $50 million mid-year reduction and in June of 2012 another $25 million year end reduction was absorbed by higher education.
Currently, the FY 2012-2013 budget contemplates an additional $67 million reduction in higher education. Although similar to the past year, higher tuition and fees counterweigh some of the general fund reductions; this strategy does not offset all reductions.
In summary, excluding state student financial aid, $615,291,008 or 41.7 percent of general fund appropriations were cut from higher education appropriations. LSU System general fund reductions, exclusive of the LSU Health Care Services Division and the University of New Orleans, which was moved to the University of Louisiana System, amounted to $231,642,806 or 37.4 percent. In terms of total spending, Louisiana higher education institutions absorbed an 8.3 percent loss and LSU System budget cuts decreased overall spending by 4.2 percent over the last four years.